By ZACHARY COILE
San Francisco Chronicle
March 22, 2008
The United States has poured more than $500 billion into Iraq, mostly for military operations. But that figure is just a small piece of the much larger bill that taxpayers will pay in the future.
Because the money for the war is being borrowed, interest payments could add another $615 billion. A heavily depleted military will have to be rebuilt at a cost of $280 billion. Disability benefits and health care for Iraq war veterans, many of them severely injured, could add another half-trillion dollars over their lifetime.
Nobel laureate economist Joseph Stiglitz and Harvard University public-finance professor Laura Bilmes, both of whom served in the Clinton administration, have included those calculations in a new study of the war's long-term costs. Their estimate of the war's price tag: $3 trillion.
"We are a rich country, and we can, in some sense, afford it. It's not going to bankrupt us," said Stiglitz, a Columbia University professor, who published the findings in a new book, "The Three Trillion Dollar War."
But Stiglitz said the war has contributed to a weakening economy -- partly by feeding the instability that has sent oil prices to record highs -- and has saddled the country with debts that will make it harder to respond to a recession, fix Social Security or meet other future needs.
"The best way to think about it is: What could we have done with $3 trillion?" he said. "What is the best way to spend the money, either for security or for our national needs in the long run? The stronger the American economy, the more prepared we are to meet any threat. If we weaken the American economy, we are less prepared."
The White House has not disputed the analysis by Stiglitz and Bilmes, but instead has attacked the idea that the escalating costs are a reason to withdraw.
"We have to ask ourselves what the cost would be of doing nothing, or of ratcheting back when we're not ready to ratchet back, in terms of making sure that Iraq does not become a safe haven for al Qaeda, making sure that Afghanistan doesn't fall back into the hands of the Taliban," said White House spokeswoman Dana Perino.
The government's own figures show the war's costs are rising. The Congressional Research Service estimates that $526 billion has been spent in Iraq since 2003. The Congressional Budget Office calculates that spending on Iraq and Afghanistan combined will cost $1.2 trillion to $1.7 trillion by 2017.
In historical perspective, the Iraq conflict is already one of the most expensive conflicts in U.S. history.
The price tag in Iraq now is more than double the cost of the Korean War and a third more expensive than the Vietnam War, which lasted 12 years. Stiglitz and Bilmes calculate that it will be at least 10 times as costly as the 1991 Gulf War and twice the cost of World War I.
Only World War II was more expensive. That four-year war -- in which 16 million U.S. troops were deployed on two fronts, fighting against Germany and Japan -- cost about $5 trillion in inflation-adjusted dollars.
The latest numbers are a far cry from the cost estimates made by war supporters in the run-up to the March 2003 invasion.
In September 2002, then-White House economic adviser Larry Lindsey told The Wall Street Journal the war would cost between $100 billion and $200 billion. He was immediately excoriated by others in the administration. Then-White House budget director Mitch Daniels called the estimate "very, very high." Then-Defense Secretary Donald Rumsfeld called it "baloney."
The White House and Pentagon came back in January 2003 with a number that was more palatable -- $50 billion to $60 billion. Rumsfeld's deputy at the time, Paul Wolfowitz, boasted that Iraq would pay for its own reconstruction with increased oil revenues.
Economists say the trouble with the early estimates was that they focused only on the cost of invading Iraq and then bringing the troops home. No one budgeted for a long occupation.
"It's quite apparent in hindsight the reason the war has been so expensive is because we have now maintained well over 100,000 and maybe closer to 200,000 troops in theater for five years," said Steven Davis, a professor of economics at the University of Chicago Graduate School of Business. He co-authored a 2003 paper comparing the cost of invading Iraq with the cost of containing former Iraqi dictator Saddam Hussein.
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